The Third Parties (Rights against Insurers) Act 2010 came into
force in the UK on 1 August 2016 and sets out detailed legal
Insolvency: an insolvent company's assets
are, in general, shared among all its creditors – this
usually means that individual creditors will only receive a
fraction of what they are owed.
Previous Law: The Third Parties (Rights
against Insurers) Act 1930 created an exception to this
general position; however the Act was outdated, did not work well
and the process was expensive and time consuming.
New Law: Replacement law in the form of the
Third Parties (Rights against Insurers) Act 2010 was
passed in 2010 and is legally in force as from 1 August 2016.
Third party rights against insurers: where an
insolvent party ("IP") has incurred a liability to a
third party ("TP"), and the IP has insurance to cover
that liability, then under the 2010 Act the IP's rights against
its insurers are transferred to and vest in the TP. The TP
can then pursue the insurer direct (whether or not a liability has
been established) and may make a recovery from the insurers
(provided a liability is established). Any insurance proceeds
recovered in this way can be retained in whole by the TP –
they will not form part of the IP's estate.
2010 Act: Under the 2010 Act the TP will
(a) have rights to request information about the insurances;
helping it to assess the prospects of pursuing the insurer, (b)
have the same rights against the insurer as the IP would have had,
(c) be able to proceed against the insurer without adding the IP to
the proceedings, (d) be subject to any right of set-off the insurer
would have had against the IP or any defences which the IP would
have had against the TP, (e) have the right to fulfil conditions of
the insurance policy as if it was the IP. The 2010 Act does not
apply where both the IP incurs a liability to a TP and its
insolvency proceedings commenced before 1 August 2016.
Possible Construction Sector Example:
Contact MacRoberts' Construction Group
As one of the largest and best known construction groups in
Scotland, we can provide outstanding breadth and depth of
experience to our clients. No other firm in Scotland has such
strong connections with all sectors of the Scottish construction
industry or has more accredited construction law specialists.
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